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This Is No Vioxx 2.0

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Merck (NYSE: MRK  ) said on Friday that it was pulling Tredaptive from the 40 countries it's sold in.

As bad as it sounds, this is essentially a non-event. It's nothing like the pharma giant pulling Vioxx nearly a decade ago. Nothing.

First and foremost, Tredaptive produced sales of less than $20 million in 2012. Merck sold $661 million worth of Vioxx in just one quarter before it was pulled off the market.

The lost future sales are a much bigger deal. But they were already priced in after a clinical trial failed to demonstrate that Tredaptive decreases cardiovascular events. If the trial had been successful, Tredaptive would likely have been approved in the U.S., and sales in Europe and elsewhere would have picked up. Woulda, colulda, shoulda.

Pulling Tredaptive should also be cheaper on the litigation side than Vioxx was. Merck said patients taking Tredaptive had increased side effects compared to placebo, but hasn't elaborated further. In a clinical trial of more than 25,000 patients, it's easy to discover rare side effects, but they're not likely to affect that many people, especially since, based on sales, not that many people are taking the drug. And it was never approved in the litigation-happy U.S., which should limit frivolous lawsuits.

How the failed clinical trial will affect sales of AbbVie's (NYSE: ABBV  ) Niaspan isn't really clear. The drugs are fairly similar -- both are extended-release niacin -- but Tredaptive also contains a second component designed to stop the annoying side effect of causing patients to feel hot and sweaty. AbbVie can claim that the second component is inhibiting the positive effects of the niacin. It may not matter one way or the other to AbbVie since Niaspan might see generic competition as early as September of this year.

One company, Amarin (NASDAQ: AMRN  ) , could be setting itself up for a Vioxx-sized disaster. Like Merck, the biotech is running a cardiac outcomes study, and while Amarin's Vascepa isn't related to Tredaptive, I continue to believe it's hard to show added benefit beyond what a change in diet and the addition of a statin can do. Considering that Amarin doesn't have any other drugs, a negative trial result in a few years would be disastrous.

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9/27/2016 4:00 PM
MRK $62.57 Up +0.42 +0.68%
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Amarin CAPS Rating: ****